E-Retailing Shifts Demand From Retail Space to Industrial Real Estate

There is a lot of discussion and speculation among business analysts regarding the impact of e-retail on brick-and-mortar retail space. While most tend to agree that e-retail will have a negative impact on the demand for retail space, they often overlook the positive impact it is having on demand for industrial and warehouse space. 

Online shoppers want to be able to receive their products as quickly and as easily as possible, and this is driving the demand for industrial real estate up across the country. With an estimated 30 percent of industrial big-box warehouse demand correlated to e-commerce, and with that proportion only expected to grow in the future, it’s easy to see why.

Online shopping is a growing trend, and this is what is driving the demand for industrial warehouse space. On a global basis, e-commerce sales are growing at roughly 20 percent annually, with the percent of retail sales made online expected to jump from 6.2 percent in 2013 to 10 percent by 2017. The demand for industrial space by these online retailers is not only growing, it's changing.

Online retailers need roughly three times as much space devoted to logistics as their brick-and-mortar counterparts. This is due to the fact that, unlike traditional warehouses, e-retailers, often carrying a greater variety of stock, must account for picking and packaging as well as space for handling customer service issues, such as returns. This is leading many retailers to construct their own logistics facilities. For example, Walmart, a traditionally brick-and-mortar retailer, is increasing its number of distribution centers with the hope of matching Amazon’s product offerings and shipping times within the next two years. This increase in availability will only help to drive demand for industrial space up, as more retailers shift towards offering quick and convenient delivery for their products. 

 

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Nick Banks

Nick created Front Street Commercial Real Estate Group in 2002 and spent the first eight years developing and acquiring office and retail projects in South Florida as well as North Central Florida. In 2010 the focus of the firm was shifted to primarily serve third party clients and perform brokerage, property management and mortgage banking functions. Nick has personally developed and acquired nearly 200,000 square feet of office and retail properties in markets throughout Florida. Prior to founding Front Street, Nick was the Director of Finance and Dispositions for Stiles Corporation in Fort Lauderdale where he financed and sold over $500 million in commercial real estate. Before joining Stiles, Nick was an Associate Director at GE Capital Real Estate where he sourced over $200 million in financing throughout Florida. Nick is a graduate of the University of Florida with a degree in Finance and a concentration in Real Estate. He serves as a board member and current vice-chair for the United Way of North Central Florida where he also chairs the Development Committee. Nick is actively involved with the Gainesville Area Chamber of Commerce where he serves as a board member and committee member for the Council for Economic Outreach. He is also a recent graduate of Leadership Gainesville which is a year long leadership program hosted by the Chamber. He is a member of Grace United Methodist Church where he has served as finance chair and as a member of the leadership council. Nick serves as an advisory board member of the University of Florida Bergstrom Center for Real Estate Studies. Nick was recently named chair of the Gainesville committee for the North Florida chapter of Urban Land Institute (ULI). He is a licensed real estate broker in the State of Florida and is a long time member of the International Council of Shopping Centers.

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